As this issue goes to press, we just wrapped another edition of Contract Pharma’s Contracting and Outsourcing Conference and Tabletop Exhibition, the outsourcing industry’s premier “speed dating” event. Held in New Brunswick, NJ, from Sept. 22-23, it was again a huge success. While the upstairs was jamming with a record number of attendees across the sold-out exhibit hall, the downstairs conference portion of the event was packed as well throughout the day and a half sessions.

Pfizer’s Pete Stevenson led off with a unique perspective on an emerging, important trend to be considered when selecting a CMO partner. He contrasted the old notion “economies of scale” with the term he coined, “economies of capability.” He told the audience while evaluating a potential partner according to economies of scale is still important, it is in fact becoming insufficient when choosing a contract service provider. It’s really an organization’s “economies of capability” that are growing in importance and matter more in today’s post-blockbuster era market driven by growth in focused therapies, smaller batch sizes and precision medicine.

Economies of scale are defined by lower unit costs driven by higher volume output, larger physical capacity, and are applicable to generics/OTCs with established manufacturing processes. Future growth here is expected in emerging markets. Economies of capability are defined by superior drug performance and quality driven by specialized technical capabilities and expertise across the value chain. This notion is applicable to products with new complex technologies, smaller batch sizes and product growth is expected globally in the years ahead.

Some players operate only with scale, Mr. Stevenson said, producing high volumes across a limited number of often tried-and-true technologies. This space is generally crowded and represents simple-to-manufacture generics and commodities. Value capture is driven solely by being the low cost provider. At the same time, he noted, some players only focus on one niche capability, specializing in one area, but lack scale. For instance, Phase I and II clinical supply for injectable products. Once volume increases the facilities are outgrown and a new CMO is needed.

Mr. Stevenson said today’s best-in-class players are multi-specialists, and will achieve both economies of scale and capability moving forward in the years ahead. “You’re not all things to all people and focus on 3-5 specialist capabilities,” he said. “You have a broad breadth of scale, technologies, expertise and technical depth around your areas of focus.”

The second day of sessions began with another growing industry topic and trend—data integrity. John Avellanet’s presentation, “Ensuring Data Integrity at CMOs and API Makers,” delved into data integrity basics, supplier responsibility and oversight tactics. He warned sponsor companies in attendance that, “YOU are accountable for your data—your suppliers are only accountable to their contract terms with you.” He cited a recent FDA warning letter:

“Although your firm may contract out certain operations, it cannot, by the same token, contract out its ultimate responsibility to ensure that the [product] it places into commerce (or causes to be placed into commerce) is not adulterated for failure to comply with CGMP requirements (see United States v. Dotterweich(1943); United States v. Park (1975)….”
–Warning Letter to EntrenetNutritionals, May 2013

Data integrity today is crucial to ensuring the safety, efficacy and quality of drugs. The problem is that as outsourcing continues to increase with more and more critical manufacturing functions performed outside the company—and outside of direct oversight—ensuring data integrity is increasingly difficult. 

If you were unable to attend and are interested in the two presentations I mentioned here, they are available at ContractPharma.com in addition to the other sessions on serialization CMO onboarding, FDA investigator insights, CMO industry trends, GDUFA present and future challenges, bio contract manufacturing trends and choosing the proper manufacturing process for your business needs.

Thank you again to all the attendees and exhibitors who made the event another great success. You can see photos in this issue beginning on page 74. Hope to see everyone again next year! It’s never too early to mark your calendars—Sept. 14-15, same place, same time!

Tim Wright, Editor
twright@rodmanmedia.com